Economy
No change in Türkiye’s priorities despite global shock: Şimşek
The global shock due to the Middle East conflict will affect Türkiye’s economic program but will not cause any change in its priorities, Treasury and Finance Minister Mehmet Şimşek said on Thursday.
Şimşek acknowledged that the Iran war is likely to cause deviations in the inflation, growth and external balance targets this year due to higher energy prices.
The conflict, unleashed on Feb. 28 by Israel and the United States against Iran, provoked reprisals from Tehran across the region and a shipping blockade in Hormuz, a crucial global trade route, leading to a significant global surge in the price of hydrocarbons.
The fallout poses a challenge for import-heavy economies like Türkiye, where inflation rose to nearly 32.4% in April, the highest measure since October 2025.
Şimşek still signaled the government would maintain its disinflation and fiscal discipline agenda.
“We are facing a major global shock, but we have never envisaged any change in the program’s priorities,” he told a summit in Istanbul.
He was referring to the government’s medium-term road map that has been implemented since 2023 and has mainly centered around a tight monetary policy to curb inflation.
Şimşek acknowledged that inflation, current account deficit, budget deficit and growth outcomes were likely to diverge from official targets this year, largely due to the impact of the Iran war-linked rising energy prices.
“This is highly likely, but we are doing and will continue to do what is necessary to keep the program broadly on track,” he said.
Buffers
The shocks are significant but manageable, Şimşek said, arguing that Türkiye had built resilience through fiscal discipline and macroeconomic buffers.
He still said Türkiye could not remain insulated from global developments. “We do not live on another planet. We are part of the global economy,” he noted.
Şimşek added that Türkiye was not facing an energy supply shock thanks to its diversification of oil and natural gas suppliers and products, adding that the country was not dependent on the Strait of Hormuz.
“Our dependence on the Strait of Hormuz in energy is now almost non-existent,” he said.
He said the government had used fiscal space to cushion households and businesses from higher fuel prices.
Without intervention, gasoline prices would have risen from TL 59 ($1.30) to TL 79 per liter, he said, but were currently around TL 64-TL 65.
“Many countries saw fuel price increases of 20%-30%, and in some cases above 30%. Türkiye managed this period with an increase of around 11%,” he said.
Şimşek said Türkiye entered the current crisis with stronger macroeconomic balances, noting the current account deficit was below 2% of GDP before the shock, while foreign exchange reserves had risen from around $100 billion before the program to roughly $166 billion.
Türkiye’s long-term external debt-to-GDP ratio has also improved to around 33% from a historical average of 44%, he added.
Şimşek said the government aimed to turn the crisis into an opportunity, including efforts to position Türkiye as a global trade hub and attract multinational firms’ regional headquarters to the Istanbul Financial Center.
“We cannot waste this crisis; we will absolutely, without a doubt, turn it into an opportunity for our country.”
President Donald Trump said on Thursday he was giving the EU until July 4 to fulfill its side of last year’s trade deal, threatening to hike U.S. tariffs to “much higher levels” if the deadline is not met.
Trump’s remarks came following what he described as a “great call” with European Commission President Ursula von der Leyen.
“I’ve been waiting patiently for the EU to fulfill their side of the Historic Trade Deal we agreed in Turnberry, Scotland, the largest Trade Deal, ever!” he said in a post on Truth Social.
“A promise was made that the EU would deliver their side of the Deal and, as per Agreement, cut their Tariffs to ZERO! I agreed to give her until our Country’s 250th Birthday or, unfortunately, their Tariffs would immediately jump to much higher levels.”
The July 4 holiday this year marks 250 years since the American colonies declared independence from British rule.
Trump on Friday had threatened to increase tariffs on EU cars and trucks to 25% this week, from 15% currently, accusing the bloc of not complying with the terms of the deal struck last July.
The EU’s implementation of the deal had slowed amid frustration over other tariff threats by Trump, including in disputes linked to his bid to annex Greenland, and legal uncertainty following a U.S. Supreme Court ruling that found many of his existing tariffs unlawful.
In late March, EU lawmakers gave their green light to the agreement, but they also sought additional safeguards.
Despite conditional approval by the European Parliament, the deal must be negotiated with EU states before it can be implemented by the bloc.
Türkiye’s central bank will maintain a tight monetary stance and will not allow a recent deterioration in inflation, driven largely by higher energy costs due to the Iran war, to worsen the medium-term outlook, its governor said on Thursday.
The war in the Middle East, unleashed on Feb. 28 by Israel and the United States against Iran, provoked reprisals from Tehran across the region and a shipping blockade in Hormuz, a crucial global trade route, leading to a significant global surge in energy prices.
Central Bank of the Republic of Türkiye (CBRT) Governor Fatih Karahan said higher costs linked to the conflict were continuing to pressure both consumer prices and the external balance.
But though this affected Türkiye’s disinflation process, Karahan said it did not change policymakers’ resolve.
“We will not allow the deterioration observed in inflation to spoil the medium-term outlook,” he told a summit in Istanbul.
Annual inflation rose to nearly 32.4% in April, the highest measure since October 2025, mainly driven by the energy-linked pricing pressures.
Karahan said the April data show the impacts of the war and said they expect energy-linked effects to continue in the short term.
“The reflections of these effects on the medium-term inflation outlook will take shape with our monetary policy stance, and we will carefully evaluate these factors while making monetary policy decisions in the upcoming period,” Karahan noted.
The jump in costs and the resulting inflationary pressures have curbed central banks’ room to cut interest rates.
CBRT flagged rising risks in its monetary policy committee statement last month, when it kept its benchmark policy rate steady at 37%, saying it was closely monitoring fallout from the Iran war and potential second-round effects.
Before the conflict began shifting expectations, the CBRT had been expected to continue a rate-cutting cycle that began in late 2024.
In February, the bank raised its year‑end inflation forecast range by two percentage points to 15%-21%, while keeping its interim 16% target unchanged.
It is due to present its second inflation report of the year next week. Analysts say it will likely feature a revision of both the target and forecasts.
As many as 1,500 ships and their crews are trapped in the Gulf due to the Iranian blockade in the Strait of Hormuz, the secretary general of the U.N.’s International Maritime Organization (IMO) said on Thursday.
The war in the Middle East, unleashed on Feb. 28 by Israel and the United States against Iran, provoked reprisals from Tehran across the region and a shipping blockade in Hormuz, a crucial global trade route.
“Right now, we have approximately 20,000 crewmen and around 1,500 ships trapped,” Arsenio Dominguez told the Maritime Convention of the Americas.
Dominguez said that maritime shipping moves over 80% of total consumed products in the world.
The stranded crew members “are innocent people who are doing their jobs every day for the benefit of other countries,” but “are trapped by geopolitical situations outside their control,” Dominguez told the gathering of industry executives and IMO representatives in Panama.
Before the conflict’s outbreak, a fifth of the world’s total petroleum and gas passed through the Strait of Hormuz. The closure has led to a significant global surge in the price of hydrocarbons.
On Monday, U.S. President Donald Trump announced a naval operation to escort the trapped ships and force the opening of the strait, but called off the push shortly after.
Washington is now waiting for an Iranian response to proposals for ending the war and reopening the Strait of Hormuz.
Italian banking giant UniCredit was again criticized on Thursday for its aggressive pursuit of Commerzbank, as German Chancellor Friedrich Merz said the approach “is how trust is destroyed.”
The Milan-based UniCredit formally launched its hostile takeover bid for Commerzbank on Tuesday after months of manoeuvring and fierce resistance from the German side.
Italy’s second-largest bank is already the leading shareholder in Commerzbank with a stake of 25%. The German government holds a roughly 12% stake.
“That is no way to treat institutions such as a German bank, Commerzbank,” Merz said in a speech to business leaders in Berlin.
“That is how trust is destroyed, not built.”
In his comments on Thursday, Merz sought to reconcile his government’s vehement opposition to Unicredit’s takeover bid with Berlin’s broader support for greater integration of financial markets across the European Union.
“Yes, we need large banks in Europe for complex financing, for IPOs, for support. Investment hubs worldwide also need large banks. But that doesn’t mean that every kind of takeover is welcome without restriction,” Merz said.
“We firmly reject hostile and aggressive approaches.”
UniCredit has tried to woo Commerzbank shareholders with promises of higher returns by narrowing its focus to the German market to spur faster growth.
The takeover bid is worth roughly 35 billion euros ($41 billion) based on UniCredit’s current share value.
But Commerzbank has accused its Italian rival of “misleading characterisations” in the fight.
Commerzbank executives contend the Unicredit bid undervalues the bank, and described a strategy outline from Unicredit last month as “a speculative attempt to dismantle Commerzbank’s successful business model.”
Turkish businesspeople came together with representatives from U.S. states during the SelectUSA Investment Summit this week to explore investment opportunities across sectors ranging from renewable energy and robotics to health care technology and dental services.
The summit, held on May 3-6 in Maryland near Washington, brought together thousands of participants, including investors, economic development officials and industry experts from over 100 countries.
More than 30 Turkish companies attended the event.
Tarık Sarvan, chairperson of leading Turkish solar technology company CW Enerji, said the firm exports around $5 million-$6 million worth of products monthly from Türkiye to the U.S. and is considering investment opportunities on a state-by-state basis.
“We are trying to create a gateway where we can sell our products,” he said, stressing that production would remain in Türkiye while potential U.S. operations would focus on assembly and sales.
Bakit Baydaliev, CEO of technology firm DOF Robotics, said the U.S. already accounts for 40% of the company’s market and that the share is growing steadily. The company plans to expand its immersive entertainment businesses across multiple U.S. states, including in Montana, Wyoming and Colorado.
RealWorks Product and Marketing Director Fulya Bayram said the company aims to expand the U.S. footprint of its AI-powered health care platform HaloScape and strengthen ties with state officials and major firms such as Nvidia.
“Our goal this year is to slightly increase our market share in the U.S., strengthen Türkiye’s representation here and build close relationships with the states,” she said.
Other Turkish firms attending the summit included dental technology startup dentalPrices and software company IWRobotx, both of which said they view the US market as key to global expansion.
Dr. Efe Çelebi, founder of the dental clinic chain Dentgroup, said his company dentalPrices has expanded into Europe with operations in Budapest and is now planning to enter the U.S. market by the end of the year.
Juliet Abdel, president of the Cedar Rapids Metro Economic Alliance, said the company offers foreign investors lower business costs, affordable living and strong transportation access as a Midwestern hub, with growth potential in aerospace and avionics, the bioeconomy and technology.
“The industries which really overlap with our interests were energy, defense and manufacturing … I’ll continue following up on the opportunities that came up in our one-on-one meetings,” she said about her meetings with investors.
Chris Chung, CEO of The Economic Development Partnership of North Carolina, described Turkish companies as “globally minded.”
“Türkiye is a big market in and of itself, but there’s a lot of opportunities sitting outside of Türkiye, including to both sell and produce products in the United States, and that’s where the intersection of opportunity sits for us,” he said.
Danish shipping group Maersk beat first-quarter profit forecasts on Thursday and maintained its full-year earnings guidance, even as it warned that the Iran war had clouded the outlook for freight rates and costs.
Shares in Maersk were down 3.3% at 7:38 a.m. GMT following the results, underperforming a broadly flat Copenhagen benchmark index amid worries that high fuel prices could hit profits.
Maersk, which is viewed as a bellwether for global trade, still projects global container volume growth of between 2% and 4% this year but said the situation remained volatile.
“The outlook for global container demand in 2026 is highly uncertain. Higher energy prices and constraints on trade in the Upper Gulf region, which in 2025 accounted for around 6% of global container trade, pose downside risks to the growth momentum,” it said in a statement.
Profit down but beats forecasts
Maersk’s earnings before interest, taxes, depreciation and amortisation (EBITDA) for the January to March period were $1.73 billion, compared to a median forecast of $1.66 billion in a company-provided poll of 10 analysts, but well below the $2.71 billion for the same period a year ago.
The first quarter does not capture the Iran war’s full impact on global supply chains, as it began on Feb. 28, when the U.S. and Israel launched coordinated strikes on Iran.
The war has disrupted shipping routes after Iran closed the Strait of Hormuz to commercial traffic, pushing up costs such as fuel.
Maersk said freight rates fell during the quarter due to continued capacity oversupply before rising sharply toward the end of the period after the outbreak of the war.
Some analysts have warned, however, that the conflict could weigh on Maersk’s earnings, as freight rates on the Asia-Europe route have nearly returned to pre-war levels while fuel costs remain elevated.
“We continue to see an increased likelihood of a downward adjustment later in the year, as freight rate developments are not expected to be able to compensate for the higher fuel costs,” Jyske Bank analyst Haider Anjum said in a research note.
Maersk said operational disruptions combined with higher fuel prices were expected to increase costs, which it was working to pass on to customers.
The Middle East situation also impacts shipping in the Red Sea, forcing Maersk to continue to reroute vessels around Africa, away from the Suez Canal and the Bab el-Mandeb Strait.
This marked an abrupt stop to Maersk’s tentative efforts for a gradual return of some services to the Suez route, seen as a key step toward ending years of global trade disruption caused by attacks on ships in the Red Sea by Yemen’s Houthi rebels.
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